Unveiled findings from GFEI’s UC Davis Working Paper 25 argue that a measured shift to smaller EVs could accelerate adoption, stabilise the auto supply chain, and preserve competitiveness among traditional manufacturers.

The Global EV Outlook 2025 confirms a continued surge in electric car sales, led by China, and a turning of policy toward a broader mix of measures—beyond electrification alone—to hasten decarbonisation. A multi-track strategy, blending incentives, efficiency gains, urban planning, and charging investment, is urged to sustain momentum.

The Global Fuel Economy Initiative (GFEI) argues that a measured shift toward smaller electric vehicles could act as a practical lever to speed up EV adoption, help stabilise the automotive supply chain, and keep traditional automakers competitive over the long run. GFEI’s Working Paper 25, produced by UC Davis, traces market trends back to 2005 and notes a broad move to larger, heavier models driven by higher profit margins. That tilt, though, brings a cascade of consequences: higher vehicle prices, slower turnover of the existing stock, and greater demand for materials — including scarce minerals — alongside higher energy use in both production and operation. In response, the paper advocates a targeted tilt toward smaller EVs to maintain affordability and broaden market reach, while preserving environmental gains. A proponent line from the FIA Foundation’s Sheila Watson underscored the logic: “Size matters in the race to electrification.” The rationale, and its caveats, are laid out in the report and echoed by industry watchers tracking policy shifts in EV strategy. (motorfinanceonline.com, fiafoundation.org)

Globally, the backdrop remains brisk. The International Energy Agency’s Global EV Outlook 2025 shows electric car sales continuing to surge, with global electric car sales topping 17 million in 2024, accounting for just over 20% (more than one in five) of new car registrations, and China continuing to dominate the market, reporting more than 11 million EVs sold in 2024. The IEA notes that outside the top markets, a record rise in 2024 brought EV adoption into sharper focus in regions such as the Americas and parts of Asia. China’s performance is particularly striking: in 2024, almost half of China’s car sales were electric, and the country accounted for a substantial share of global EV sales, helped by price competitiveness and a large trade-in incentive scheme that supported consumer uptake. For the broader auto industry, these dynamics imply that China’s battery supply chains, manufacturing efficiency, and software capabilities are contributing to a competitive edge for smaller, cost-effective EVs in global markets. (iea.org)

Policy levers and market strategy are now moving beyond a simple ‘electrify everything’ stance. A FIA Foundation briefing summarising an ICCT-commissioned report emphasises that rapid policy action should combine aggressive acceleration of zero-emission vehicle (ZEV) adoption with a broader suite of measures. The analysis highlights that, in parallel with electrification, governments should pursue enhanced vehicle efficiency, smarter urban planning, and improvements to freight logistics; together, these measures could deliver large CO2 reductions. The briefing also calls for international cooperation, diversified transport policy, and investment in charging and energy supply to unlock a rapid transition. In parallel, public policy recommendations include targeted incentives, tax measures, and regulatory support to steer demand toward smaller vehicles, alongside exploring temporary tariffs to diversify supply chains in vulnerable regions and to promote more cost-effective charging infrastructure and advanced battery designs. (fiafoundation.org) The strategic value of these mixed policies is reinforced by industry and policy analysis from leading think tanks and consultants, including data-driven observations from BCG on China’s fast-moving BEV trajectory, where the 2024 BEV share neared 27% in that market as Western manufacturers reassess their assumptions about scale, cost, and capability. (bcg.com)

A broader decarbonisation pathway for road transport is then framed as a portfolio of complementary measures, not a single fix. The ICCT’s Vision 2050 report lays out a comprehensive policy package designed to keep global transport well on track for a trajectory well below 2°C, emphasising that further accelerating ZEV sales, expanding used-vehicle electrification, tightening ICE efficiency, and urban freight optimisation all play critical roles. The analysis underlines that even with ambitious ZEV adoption, the emissions trajectory from vehicles already on the road remains a key constraint, and that a mix of policies — including fleet renewal and power system decarbonisation — is necessary to avoid overshoot. The argument is mirrored in Breakingviews, which notes that China’s car industry is increasingly led by nimble, technology-driven players that are outperforming traditional giants in specific metrics, driven by in-house software and battery capabilities, and by licensing technology to Western rivals. Taken together, the literature signals that the automotive sector must embrace a diversified, multi-track strategy: pursue rapid ZEV penetration while strengthening supply chains, charging and grid readiness, and the capabilities of smaller, efficient EVs to sustain market growth and global competitiveness. (theicct.org, reuters.com)

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Source: Noah Wire Services